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The Importance of Franchise Operations

by Ed Teixeira

Once the franchise agreement is executed and the franchise fee paid, the relationship between the franchisor and franchisee begins in earnest. A competent and experienced Franchise operations Department is needed to train, support and lead a successful franchise program. Whether you’re a franchisor or franchisee this article describes what constitutes effective franchise operations.

If one were to consider the attributes that successful franchise companies share, the list would include:

Franchisees are meeting their financial expectations.
Franchise system standards are upheld and enforced.
There is a positive climate of franchise relations.
There is a high level of communication between the franchisor and its franchisees.
Franchisee litigation is negligible.
New programs and products are readily accepted by franchisees.

I'm certain other items could be added to this list, however, for our purposes we'll use only those listed above.

When considering these various attributes the responsibility for implementing, evaluating and monitoring them rests upon the shoulders of the franchise operations department. There is no doubt that the sale of new franchises and creation of new sales and marketing programs is a critical component of successful franchise programs. Yet without the organizational structure and personnel to train the new franchisees, support new and existing locations and deal with the everyday problems that franchisees face a franchisor will not fulfill its true potential.

Franchisors who wish to achieve success and reach their goals require a competent franchise operations department. The following are the key requirements necessary to establish a successful program:

Franchise operations should report to the president or CEO. This allows for open communication flow between the franchise leadership and operations.
Operations must have a role in the sale of new franchisees. In many companies the operations staff is not included in the franchise sales process. This practice excludes those most familiar with the operation of franchises from being able to qualify and render their judgment on future franchisees. Some franchisors go so far as to grant the operations department veto power over the selection of new franchisees.
There needs to be an organized program for gaining franchisee feedback through the operations staff. Field staffs who deal with franchisees on a regular basis are in the best position to gain unfiltered feedback from the franchisees.
Strategic or important decisions which impact the franchisee community should include the participation of the franchise operations leadership.
Franchise operations leadership needs to have experience and credibility since they represent the face of the franchisor.

Franchise operations are an integral part of all successful franchise programs. The lifeblood of a franchisor depends upon the addition of new franchisees that can promote the brand and increase revenues. However, without a strong franchise operations component which is actively involved in the day to day operations of the franchisor the road to a successful franchise network will be filled with obstacles.